Dr Hafez Abdo, Nottingham Trent University. The UK petroleum fiscal regime was established in 1975 and tightened up with a number of different new taxes up until 1981. The period 1983-2000 witnessed three petroleum tax relaxations. These took place in 1983, 1987-88, and 1993, and presented a clear change in the type of UK governance of its petroleum resources from a proprietorial to a non-proprietorial regime.
This paper will explore and test the historical rationales for the three UK petroleum tax relaxations. The investigation of these rationales is based on three viewpoints: that of the Government, the UK oil industry, and academics. The tests of the rationales will measure the success of the Government petroleum policy which was based on using tax relaxations to stimulate oil and gas investments.
This paper will be set in the context of the two broad alternatives (proprietorial and non-proprietorial) because the UK has, over time, come to use its fiscal regime more and more as a tool of intervention. This became particularly apparent from the 1980s onwards after the initial period of fiscal tightening which had occurred in the 1970s with the aim of securing a higher share of rents for the UK during a period of high oil prices. The Government became increasingly concerned and wanted to stimulate more production and then to sustain it, particularly after 1986 when oil prices fell very sharply. Thus, it was that the UK underwent three fiscal relaxations in 1983, 1987-88 and 1993 by the end of which new fields would only be subject to ordinary corporation tax (CT), and royalties were on their way to being abolished. But did these interventions actually work? This paper asks this question, almost for the first time, and the answer or answers are extremely important for assessing the validity of the interventionist approach.